IRELAND - The number of active Irish pension schemes fell by almost 10% in 2010, while the Pensions Board said three-quarters of defined benefit (DB) schemes were in deficit, according to the newest annual report by the pensions regulator.

The organisation's chief executive also called on schemes and trustees to take equity exposure and risk management issues more seriously and heed the board's warning to lower Irish funds' exposure to the stock market.

Chair Jane Williams sounded alarm about the impact of the recession, specifically highlighting the declining workforce.

"The effect of the recession is evident in the numbers participating in occupational pension schemes," she said. "This is a serious step back for pensions which could have lasting consequences."

The board said there had been a 9.5% reduction in open pension schemes between 2009 and 2010, with the number of total pension funds falling to 76,291.

While the number of open defined contribution schemes fell the most, to 75,183, a 15.3% decline in open DB schemes meant the latter vehicle suffered the adverse effects of the current climate more.

The board's chief executive Brendan Kennedy defended the suspension of DB funding standard deadlines last year as the "pragmatic decision", giving funds the time to address deficits.

He also warned that the larger threat was emanating from risk management - or rather, a scheme's lack of any such measures.

He said schemes had taken steps to identify investment risk and therefore shift their exposure away from the equity market.

"It is now over three years since the markets crashed, and all data, both in the board and elsewhere, show no noticeable reduction by Irish schemes of their aggregate equity exposure. 

He added: "The unavoidable conclusion is that, in very many cases, trustees have not faced up to the issues and are continuing to expose the benefits of their members to significant risks of further losses."

Williams added the organisation had been working closely with government and the Department of Social Protection to "underpin stable pension provision during a time of international financial uncertainty".

She said that one of the ways this was being achieved was through regulation, as well as providing relevant information.

However, she also highlighted the importance of reform to the market, noting that pension reforms first suggested in spring last year had not been forgotten.

"I look forward to our active participation in the implementation of the National Pensions Framework, launched by the government in March 2010," she said. "This work is ongoing and will continue throughout 2011."

The government recently launched a tender process seeking to appoint as many as 70 consultants to advise on the implementation of the framework.

It was also recently revealed that it did not at any point consult with the Pensions Board during the implementation of the controversial pensions levy that will see an annual tax of 0.6% introduced as of this year.

Topics